01225.0045/919332.2 1
APN 102-481-0020-000 (Above space for recorder’s use only) (Exempt from recording fees per Govt Code § 6103
and §27383)
THIRD AMENDMENT TO OPERATING COVENANT AND RESTRICTIVE COVENANTS
AFFECTING INTERESTS IN REAL PROPERTY
This THIRD AMENDMENT TO OPERATING COVENANT AND RESTRICTIVE COVENANTS AFFECTING INTERESTS IN REAL PROPERTY (“Amendment”) is entered into as of ___________, 2023 by and between the CITY OF CHINO, a municipal corporation (“City”) and CREATIVE BUS SALES, INC. and/or any name by which it may be called in the future, an Indiana corporation (“Creative Bus”). The City and Creative Bus shall collectively be referred to as the “Parties”.
RECITALS
A. City and the predecessor to Creative Bus, T&T Investments, LLC, a California limited liability company (“T&T”), are parties to that certain Operating Covenant and Restrictive Covenants Affecting Interests in Real Property dated December 1, 2001, recorded on November 1, 2002, as Instrument No. 2002 - 0591622, relating to the operations of T&T on certain real property more particularly described therein as the "Site," and City' s payment to Creative Bus of an amount equal to a percentage of the sales tax generated by T&T’s conduct of such operations (“Original Covenant").
B. On or about January 7, 2003 , City and T&T entered into that certain Amendment to Operating Covenant and Restrictive Covenants Affecting Interests in Real Property ("Amendment No. 1"), pursuant to which the parties agreed to establish October 1, 2002 as the “Commencement Date."
C. On or about October 1, 2012, City and T&T entered into that certain Second Amendment to Operating Covenant and Restrictive Covenants Affecting Interests in Real Property ("Amendment No. 2"), pursuant to which the parties agreed to (i) add an additional ten (10) Payment Periods, (ii) set forth the terms for calculating the City Consideration payments during such additional Payment Periods, and ( iii) add additional covenants of City and Creative Bus. The Original Covenant, as modified by Amendment No. 1 and Amendment No. 2, is hereinafter referred to as the "Covenant."
D. On or about May 1, 2015, Creative Bus began leasing the entire Site from T&T .
RECORDING REQUESTED BY AND
WHEN RECORDED, MAIL TO:
CITY OF CHINO
13220 Central Avenue
Chino, California 91710
Attn: City Clerk
01225.0045/919332.2 2
(“Assignment”).
E. City wishes to consent to the Assignment of the Covenant to Creative Bus by this Amendment.
F. Additionally, t he Covenant expired as of October 1, 2022 and the parties now wish to provide for the retroactive extension of the Covenant, establish new Payment Periods and set the terms for the City Consideration of same.
G. The parties intend to amend the Covenant as set forth herein.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. Incorporation of Recitals. The foregoing recitals are incorporated herein.
2. Effective Date. This Amendment shall be effective upon recordation in the Official Records of San Bernardino County.
3. Defined Terms. Terms not specifically defined in this Amendment shall have the meaning in the Covenant.
4. Assignment. Creative Bus hereby represents that all the rights and interest in the Covenant has been duly assigned to Creative Bus by way of the Assignment and that Creative Bus is fully and unequivocally authorized to enter into this Amendment by virtue of such Assignment. Based on such represent ation, which representation is a material inducement to the City entering into this Amendment, the City hereby approves the assignment of the Covenant to Creative Bus.
5. Modifications to Original Covenant. City and Creative Bus hereby agree to add additional six (6)-year periods to the Covenant, commencing October 1, 2022, with the option to extend for two (2) additional two (2) -year periods by mutual agreement (collectively, “ Additional Payment Period ”) for a total maximum term ending September 30, 2032 (“Extended Operating Period”). To effectuate this modification, the Covenant is hereby modified as follows:
A. Section 1 Definitions, “ Additional Payment Period ”. The definition of “Allowable Sales Tax”, as provided for in Amendment No. 1 and amended by Amendment No. 2, is hereby amended in its entirety to read as follows:
“The term “Additional Payment Period” means the additional six (6)-year periods commencing October 1, 2022, with the option to extend for two (2) separate Option Periods by mutual agreement.
B. Section 1 Definitions, “ Allowable Sales Tax ”. The definition of “Allowable Sales Tax”, as provided for in Amendment No. 1 and amended by Amendment No. 2, is hereby amended in its entirety to read as follows:
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“The term “Allowable Sales Tax ” means for each Extended Additional Payment Period, the (i) the Sales Tax, less (ii) the sum of Seventy -Five Thousand Dollars ($75,000). For each of the Additional Payment Periods added pursuant to this Amendment, City shall pay Creative Bus an amount equal to a percentage (“Applicable Percentage ”) of the actu al amount of Allowable Sales Tax for that Revised Extended Payment Period. The Applicable Percentage for each of the six (6) is as follows:
Payment Period Applicable Percentage
2002-2022 Per Amendment No. 2
2023 40%
2024 40%
2025 35%
2026 35%
2027 30%
2028 30%
It is expressly understood by Creative Bus that the "Allowable Sales Tax" for each of the ten (10) Additional Payment Periods during the Revised Extended Operating Period does not include the first Seventy- Five Thousand Dollars ($75,000) of Sales Tax received by City for that Additional Payment Period. In connection therewith, as to each of the ten (10) Additional Payment Periods.
City and Creative Bus hereby agree that the amount to be paid by City to Creative Bus hereunder during each of the potential ten (10) Additional Payment Periods in the Extended Operating Period is a fair exchange for the consideration to be furnished by Creative Bus to City in that Additional Payment Period.
The Parties acknowledge that the second paragraph of Section
4.1.1 of the Covenant and the calculation of City Consideration set forth therein is not applicable to the Extended Operating Period.”
C. Section 1 Definitions, “Payment Period” . The definition of “Payment Periods”, as provided for in Amendment No. 1 and amended by Amendment No. 2, is hereby amended in its entirety to read as follows:
“The term “Payment Period” shall mean the twenty (20) one-year periods ending September 30, 2022, plus additional six (6)-year periods commencing October 1, 2022, with the option to extend for two (2) separate Option Periods by mutual agreement.”
D. Section 1 Definitions, shall be amended to add the term “Option Periods” to read as follows:
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“The term “Option Periods” shall mean City’s option, in its discretion, to extend the Payment Periods and Termination Date by two (2) additional two (2)-year periods.”
E. Section 1 Definitions, “Termination Date”. The definition of “Termination Date”, as provided for in Amendment No. 1 and amended by Amendment No. 2, is hereby amended in its entirety to read as follows:
“The term “Termination Date ” shall mean the twenty (20) one - year periods ending September 30 2022, as extended by
additional six (6)-year periods commencing October 1, 2022, and terminating on September 30, 2028, except that the parties may, by mutual agreement, extend such time for two (2) separate Option Periods, for a total maximum term ending September 30, 2032.”
6. Affirmation of Agreement; Warranty Re Absence of Defaults. City and Creative Bus each ratify and reaffirm each and every one of the respective rights and obligations arising under the Covenant, as amended by this Amendment. Each Party represents and warrants to the other that there have been no written or oral modifications to the Covenant other than by way of this Amendment and as provided herein. Each Party represents and warrants to the other that the Covenant, as amended by this Amendment, is currently an effective, valid, and binding obligation.
Creative Bus represents and warrants to City that, as of the date of this Amendment, City is not in default of any material term of the Agreement and that there have been no events that, with the passing of time or the giving of notice, or both, would constitute a material default under the Covenant.
City represents and warrants to Creative Bus that, as of the date of this Amendment, Creative Bus is not in default of any material term of the Covenant and that there have been no events that, with the passing of time or the giving of notice, or both, would constitute a material default under the Covenant.
7. Adequate Consideration. The parties hereto irrevocably stipulate and agree that the y have each received adequate and independent consideration for the performance of the obligations they have undertaken pursuant to this Amendment.
8. Authority. The persons executing this Amendment on behalf of the parties hereto warrant that (i) such party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Amendment on behalf of said party, (iii) by so executing this Agreement, such party is formally bound to t he provisions of this Amendment, and (iv) the entering into this Amendment does not violate any provision of any other Amendment to which said party is bound.
9. Counterparts. This Amendment may be executed in counterparts, each of which when so executed and delivered will be deemed to be an original, and such counterparts together will constitute one instrument.
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[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date specified above.
CREATIVE BUS:
CITY:
CREATIVE BUS SALES, INC., a
Indiana corporation
By By: __________________________
_______________, __________
By:By: __________________________
_______________, __________
CITY OF CHINO, a municipal
corporation
By:
Linda Reich, City Manager
ATTEST:
__________________________
Natalie Gonzaga, City Clerk
APPROVED AS TO FORM:
ALESHIRE & WYNDER LLP
By: ________________________
Fred Galante, City Attorney
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ACKNOWLEDGMENT
State of California )
County of San Bernardino )
On , 2023, before me,
(insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ______________________
(Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
01225.0045/919332.2
ACKNOWLEDGMENT
State of California )
County of San Bernardino )
On , 2023 before me,
(insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature ______________________
(Seal)
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.